Consumers' Decision between Private Labels and National Brands in a Retailer's Store: A Mixed Multinomial Logit Application

We propose to analyze the determinants of consumers’ brand decision within aretailer store using a multinomial mixed logit approach. For the consumers’ choice, nationalbrands compete with private labels (both me-too product and high quality store brand). We firstfind that the standard private label (me-too), independently of the price effect, performs betterthan all national brands in terms of consumers’ utility. Second, the high-quality private labeldoes not reach its target yet in term of consumers’ acceptance due to a poor productcharacteristics perception. Last, it appears that households’ objective socioeconomic variables(income, education and household size) do not play any role in private label perception,whereas objective consumption behaviour (store loyalty) clearly favours store brand perception.We find that consumers have a lower private label demand elasticity than the low store loyalones.